India's ratings already reflect Fed tapering fears - Fitch

Thu Nov 21, 2013 11:05am IST

A shopkeeper counts Indian currency notes inside his shop in Jammu July 14, 2010. REUTERS/Mukesh Gupta/Files

A shopkeeper counts Indian currency notes inside his shop in Jammu July 14, 2010.

Credit: Reuters/Mukesh Gupta/Files

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Reuters Market Eye - India's narrowing current account deficit will not be enough to shield the country from pressures tied to Fed tapering, says Fitch Ratings.

However, Fitch adds the spillover effects of the Indian rupee's weakness have not significantly hurt India's creditworthiness and will therefore not trigger any ratings action at this point.

"(India's ratings) already incorporate both the sovereign's vulnerabilities and tolerance for volatility in global financial market conditions," Fitch said.

Fitch adds India's economy has "not lost much momentum" on the back of "resilient" agriculture and exports, predicts economic growth of 4.8 percent in 2013/14 and 5.8 percent in 2014/15.

Fitch also notes India's fiscal deficit remains under pressure, especially ahead of the general elections due next year, but says the government is likely to clam down heavily on spending.

Fitch rates India at "BBB-minus", the lowest investment grade rating. It revised its outlook for the country to "stable" from "negative" in June.

(Reporting by Neha Dasgupta)

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Comments (2)
indianmoney wrote:
The drastic measures imposed to protect the rupee in September seem to have worked albeit for the time being.Gold import restrictions are providing strong results.With the finance minister setting a fiscal deficit target of 4.8% of the GDP as a red line which should not be crossed and positive sentiments that CAD could be as less as $ 56 Billion India has scrapped through a rating of investment grade.This shows that if strong measures are taken and implemented to improve the economy there is no reason why India cannot have a rating upgrade.

Nov 21, 2013 12:19pm IST  --  Report as abuse
indianmoney wrote:
The drastic measures imposed to protect the rupee in September seem to have worked albeit for the time being.Gold import restrictions are providing strong results.With the finance minister setting a fiscal deficit target of 4.8% of the GDP as a red line which should not be crossed and positive sentiments that CAD could be as less as $ 56 Billion India has scrapped through a rating of investment grade.This shows that if strong measures are taken and implemented to improve the economy there is no reason why India cannot have a rating upgrade.

Nov 21, 2013 12:19pm IST  --  Report as abuse
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